Nov 21 (Reuters) - The U.S. Medicare and Medicaid health programs will cover the cost of infusing Dendreon Corp's prostate cancer vaccine Provenge in addition to the drug itself, the company said on Monday.
Dendreon's shares, which have lost more than 80 percent of their value since May, rose 4.7 percent following the ruling by the Centers for Medicare and Medicaid Services (CMS).
The vaccine was approved to much fanfare and began selling in May 2010, but has endured a disappointing launch in part due to physician uncertainty about reimbursement for the medicine that costs about $93,000 for a course of three infusions.
The Seattle-based company said that, under the updated coverage policy, the costs associated with administering Provenge can now be billed separately. CMS said in June it would cover the cost of the drug itself.
Physicians are reimbursed $125 per infusion for administering biologic drugs, on average, depending on geographic location and the length of the infusion, said Katherine Stueland, a spokeswoman for Dendreon.
The CMS decision will cover claims for infusion costs of Provenge retroactive to June 30.
Unlike traditional vaccines that prevent disease, Provenge works by using cells from a patient's own body to spark the immune system to attack the cancer.
Dendreon withdrew its bullish sales forecast for Provenge in August, citing lack of physician familiarity with the new type of treatment, as well as concerns about getting paid. The move sent Dendreon shares shares, which had approached $44 in early May, plummeting 67 percent.
The company has since said it expects only modest sales growth for Provenge for the next several quarters.
"Today's announcement provides additional comfort to physicians concerned about Provenge reimbursement," ISI Group analyst Mark Schoenebaum said in a research note.
Schoenebaum estimates that about three-quarters of patients using the drug are eligible for the Medicare program for the elderly, so the CMS decision represents "an incremental positive for Dendreon."
Dendreon shares close up 4.7 percent at $8.73 on Nasdaq after rising as high as $9.09 earlier in the day.
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